Shop prices continue to fall amid fierce competition
Retail prices continued to slide this month as fierce competition among retailers continued to drive deflation, according to new figures.
The latest BRC-Nielsen shop price index for October revealed that shop prices fell by 1.2% this month, although this represented a slight slowdown in the rate of decline, from 1.6% last month.
This was driven by a 2.7% decline in the price of non-food items, as clothing retailers tried to drive shoppers into stores as restrictions continue to impact demand.
Nevertheless, this represented a reduction in deflation from September, where prices were 3.2% lower than the same month a year earlier.
“Once again, it is good news for consumers with shop prices falling in October, albeit at a slower pace compared to the previous month,” said British Retail Consortium CEO Helen Dickinson.
“As the retail industry began to see sales bounce back, non-food prices saw the shallowest decline since the start of the pandemic.
“However, given the wider economic context, with stricter restrictions and a possible rise in unemployment, we are likely to see continuing discounts in non-food for months to come.
“Meanwhile, food inflation remained low as supermarkets fiercely competed with one another to offer the best quality goods at the lowest prices.”
Food inflation remained steady at 1.2% for the month, as a decrease in ambient food inflation offset more expensive fresh produce.
Fresh food inflation increased from 0.2% to 0.4% in October, while ambient food prices increased by 2.3% for the month.
Mike Watkins, head of retailer and business insight at Nielsen, said: “With pandemic restrictions extended, shopping behaviour has been in a holding pattern as households adjust to new ways of working, living and spending.
“To help sales volumes, non food retailers are limiting any price increases coming through the supply chain and food retailers are continuing with the lower prices introduced in recent weeks.
“And should the recession and the growth in unemployment have a further impact on consumer spend, we can expect shop price inflation to remain low for the rest of the year.”